Rent control
Rent control is a regulation that limits rent increases and/or sets maximum rental prices to ensure affordability and protect tenants from excessive rent hikes.
Rent control consists of two types: rent increase limits and initial rent caps.
• Rent increases are restricted by a variable annual percentage, which can be tied to an index (e.g.,
CPI + 1%) and may have upper or lower boundaries. The cap can be set as a percentage or an absolute amount over a defined period.
• Initial rent caps ensure that newly agreed rents do not exceed limits set by local authorities. These caps can be fixed or indexed and are often temporary, though they may be extended or adjusted over time. When renewing or reletting a unit, the initial rent cannot exceed the indexed rent of the previous lease.
Rent control methodologies may vary per country.